1. The question that falls to be decided in this second appeal is whether a sub-mortgagee impleaded as a defendant in a suit for sale brought by the original mortgagee is entitled to apply for a final decree where the preliminary decree for sale ascertained the amount due to him but contained no provision authorising him to make such an application on default of payment by the mortgagor of the amount due to the original mortgagee.
2. The defendants 1 and 2 in the suit executed, along with another a simple mortgage for Rs. 2,000 in favour of the plaintiff's father in respect of the suit properties on 22nd September, 1920. The plaintiff's father sub-mortgaged his mortgage right to secure a sum of Rs. 1,500 borrowed from the third defendant on 12th October, 1927 and effected a further sub-mortgage for Rs. 500 on 7th December, 1929 in favour of defendants 4 and 5. On, the adjudication of the fifth defendant as insolvent his interest in the sub-mortgage vested in the Official Receiver, the seventh defendant; and eventually passed by transfer to the defendants 8 to 10 who have since been substituted in the place of defendants 5 and 7. The original mortgagee sued to enforce the mortgage and a preliminary decree for sale was passed on 5th March, 1938, fixing 5th June, 1938, for payment of the amount declared due. On 5th March, 1941, defendants 8 to 10 filed an application (I.A. No. 126 of 1941) for passing a final decree in the suit, the mortgagor not having paid the amount due as directed by the preliminary decree, and the third defendant made a similar application (I.A. No. 158 of 1941) on 15th March, 1941, which was followed by an another application made by him I.A. No. 43 of 1942, dated 10th January, 1942, to transpose him as the second plaintiff. All these applications were opposed by the defendants 1 and 2 on the ground inter alia that neither under the terms of the preliminary decree nor under the law were the defendants 3 and 8 to 10 entitled to initiate proceedings for a final decree being passed in the suit and that transposition of the third defendant as the second plaintiff would not, even if ordered, avail him as on the date on which I A. No. 43 of 1942, was filed, an application for a final decree would be time barred. The trial Court overruled the objection, transposed the third defendant as second plaintiff, and passed a final decree for sale after scaling down the debt in accordance with the provisions of the Madras Agriculturists' Relief Act, 1938. An appeal to the lower appellate Court having proved unsuccessful, the second defendant has brought this second appeal.
3. It has been held that Article 181 of the Limitation Act governs an application for a final decree in a suit for a sale or foreclosure, (See Subbalakshmi Ammal v. Ramanuja Chetti : (1918)35MLJ552 ), and the application by the third defendant for his transposition as second plaintiff having been made more than three years after the date fixed for payment under the preliminary decree, such transposition cannot avail him, and his application for a final decree which no doubt was made within time must be dealt with as one made by him as the third defendant in the suit.
4. Now, the preliminary decree, after declaring the amounts respectively due to the plaintiff and the third defendant directed that the defendants 1 and 2 should pay into Court on or before the 5th day of June, 1938, the sum declared due to the plaintiff with further interest till date of payment, that on such payment the plaintiff should deliver up all documents in his possession relating to the mortgaged property to defendants 1 and 2 and that the amount deposited should be paid to the third defendant, the defendants 4, 5 and 7, and the balance if any to the plaintiff, and it provided that on default of payment as aforesaid, ' the plaintiff may apply to the Court for a final decree for the sale of two-fifths of the mortgaged properties ' (a third party having established his right to three-fifths of the same). The decree also contained further provisions for payment of the sale proceeds to the parties in the same order of priority, payment to the defendants 4, 5 and 7 however being directed to be made on their sub-mortgage being ' proved in the final decree.' It is argued for the appellant that the preliminary decree authorised only the plaintiff to apply for a final decree on default of payment by the mortgagors, and that, therefore, it is not competent for the sub-mortgagees who were defendants in the suit to make such applications, and reference was made in support of the argument to Order 34, Rule 5(3) which provides that in case of default of payment as directed by the preliminary decree the Court shall 'on application by the plaintiff ' pass a final decree directing a sale of the mortgaged property. I am unable to accept the argument. Rule 5(3) contemplates the normal case where a mortgagee who sues to enforce his mortgage is assumed to apply for a final decree on default of payment by the mortgagor, and the preliminary decree in this suit, also proceeds on the same assumption. It is not correct, in my opinion, to read either the rule or the preliminary decree as implying that none else shall have the right to make an application for a final decree in case of the mortgagor's default. The question whether a party to a mortgage suit is entitled to apply for a final decree for sale must, it seems to me, be determined rather with reference to the rights and reliefs declared and awarded under the preliminary decree than with reference to his place in the array of the parties. That a person entitled to apply for a final decree for sale need not necessarily appear as a plaintiff on the record is shown by the form prescribed for a preliminary decree for sale in a suit for sale by a sub-mortgagee against the mortgagor and the original mortgagee (Form No. II of Appendix D, Schedule I of the Code). No doubt the form contemplates the original mortgagee defendant paying the amount declared due to the sub-mortgagee plaintiff, and applying for a final decree for sale against the mortgagor who makes default in payment of the amount due to the original mortgagee; but the point is that if, according to the appellant's construction of Order 34, Rule 5(3) the plaintiff alone can apply for a final decree in a suit for sale and no other, the aforementioned form would be inconsistent with that provision. Indeed, the contention overlooks the derivative character of a sub-mortgage as an assignment of the mortgage right by the original mortgagee by way of charge, and there is no obvious reason why the sub-mortgagee as a person claiming under the original mortgagee should not, on the general principle recognised in Section 146 of the Code of Civil Procedure, be entitled to apply for a final decree for sale of the mortgaged property where the original mortgagee plaintiff fails to make such application.
5. Reliance was placed on Vedavyasa Iyer v. Madura Hindu Labha Nidhi Co., Ltd. : (1918)35MLJ639 as supporting the appellant's contention. It was held in that case that where, in a suit brought by a prior mortgagee against the mortgagor and a puisne mortgagee, a decree was passed directing the sale of the mortgaged property and payment, out of the sale proceeds, not only of the amount declared due to the prior mortgagee but also of the sum found due to the puisne mortgagee if any surplus was left after payment to the former, it was not open to the puisne mortgagee to apply for sale of the property, for the discharge of the amount due to him if the prior mortgagee's debt was otherwise satisfied. The decision can have no application here, as the sub-mortgagee's position in relation to the original mortgagee is essentially different from that of a puisne mortgagee in relation to the prior mortgagee. Indeed, the learned Judges distinguished an unreported case relating to a sub-mortgagee, observing,
The sub-mortgagee is an assignee of the original mortgagee, and his being allowed to work out his rights by doing what his mortgagor could have done would not confer similar rights on third parties claiming on their own rights.
6. On the other hand, the recent decision of this Court in Hajee Abdulla Sahib v. Shqffee Mohamed Sahib : (1945)1MLJ196 supports the respondent's contention. It was a suit for dissolution of an alleged partnership and taking of accounts in which the defendants denied the partnership and preferred a counter-claim alleging that the plaintiff had acted as their commission agent and asked for an account. The Court rejected the plaintiff's claim of partnership but allowed the counter-claim and passed a preliminary decree for the taking of the accounts. At that stage the defendants sought to withdraw their counter-claim but the plaintiff insisted on the accounts being taken. The Court held that, although the preliminary decree was passed at the instance of the defendants, as the taking of accounts might result in a benefit to the plaintiff the latter was entitled to proceed with the matter even if the defendants did not want to proceed. On the authority of the Privy Council ruling in Lachminarain Marwari v. Balmukund Marwari (1924) 47 M.L.J. 441 : L.R. 51 IndAp 331, the decision was based on the broad principle that after a decree has been passed it is open to any party to the suit who would be benefited by its enforcement to initiate further proceedings. In the present case, it cannot be doubted for a moment that the sub-mortgagees would be benefited by a sale of the mortgaged properties and I think the principle referred to above applies.
7. The appeal is dismissed with costs. Leave refused.